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Old 12-01-2017, 04:09 PM
 
Location: Central Mexico and Central Florida
4,258 posts, read 1,749,172 times
Reputation: 5872

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Quote:
Originally Posted by aridon View Post
I believe you only have to be under contract prior to the new year, not sold, to still qualify for the old tax treatment.
I wish people would read the bill at congress.gov

The wording is on SALES occurring after 12/31/2017. A contract is NOT a sale.
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Old 12-01-2017, 05:10 PM
 
Location: Forest bathing
854 posts, read 439,029 times
Reputation: 2033
We have lived in our home for over 35 years. Prices are escalating significantly. When we decide to move to move, it will be our last one, either to an assisted living situation or a condo. The housing market has its ups and downs, but our value has never been even close to what we paid like some of our neighbors who bought in 2006 or 2007. I think one of them is still underwater. We will do well.
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Old 12-01-2017, 09:50 PM
 
1,729 posts, read 809,237 times
Reputation: 3265
Quote:
Originally Posted by dothetwist View Post
I wish people would read the bill at congress.gov

The wording is on SALES occurring after 12/31/2017. A contract is NOT a sale.
Actually you need to look further as you are incorrect.

For tax purposes, the relevant law is found in paragraph 13(1) of the Eighth Schedule to the Income Tax Act. Let us look at it.

The time of disposal of an asset by means of—

(a) a change of ownership effected or to be effected from one person to another because of an event, act, forbearance or by the operation of law is, in the case of—

(i) an agreement subject to a suspensive condition, the date on which the condition is satisfied;

(ii) any agreement which is not subject to a suspensive condition, the date on which the agreement is concluded;


So essentially, once contingencies are exhausted the sale can be considered complete as of that time in the contract period. NOT just at time of closing.

So long as that is the case you can close in 2018 and still file for 2017.

Last edited by aridon; 12-01-2017 at 10:16 PM..
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Old 12-02-2017, 05:02 AM
 
Location: Central Mexico and Central Florida
4,258 posts, read 1,749,172 times
Reputation: 5872
Quote:
Originally Posted by aridon View Post
Actually you need to look further as you are incorrect.

For tax purposes, the relevant law is found in paragraph 13(1) of the Eighth Schedule to the Income Tax Act. Let us look at it.

The time of disposal of an asset by means of—

(a) a change of ownership effected or to be effected from one person to another because of an event, act, forbearance or by the operation of law is, in the case of—

(i) an agreement subject to a suspensive condition, the date on which the condition is satisfied;

(ii) any agreement which is not subject to a suspensive condition, the date on which the agreement is concluded;


So essentially, once contingencies are exhausted the sale can be considered complete as of that time in the contract period. NOT just at time of closing.

So long as that is the case you can close in 2018 and still file for 2017.
Wrong again.

THIS is date house is sold...taken from IRS publication 523, Selling Your Home.

Eligibility Step 2—Ownership
Determine whether you meet the ownership requirement.
If you owned the home for at least 24 months (2
years) during the last 5 years leading up to the date of
sale (date of the closing),
you meet the ownership requirement.
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Old 12-02-2017, 07:41 AM
 
730 posts, read 298,429 times
Reputation: 1153
Quote:
Originally Posted by luv4horses View Post
Why are people so eager to punish flippers? It seems like they are doing a service in taking ugly decrepit houses and making them desirable. If they get to use the capital gains rate for their improvements they are probably passing along part of that so-called windfall to the buyer, real estate sales industry, materials providers, etc. Just because some people don't like the idea of the astute "flipper", why make it tougher on everyone else?

BTW, any couple that makes over 500K profit on a home within 2 yrs had to have been pretty dang lucky or pretty darn smart...or pretty sneaky and will be found out, lol.
Hardly punitive. You can still flip houses, you just don't get as much of a tax subsidy to do so.
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Old 12-03-2017, 03:44 AM
 
1,729 posts, read 809,237 times
Reputation: 3265
Quote:
Originally Posted by dothetwist View Post
Wrong again.

THIS is date house is sold...taken from IRS publication 523, Selling Your Home.

Eligibility Step 2—Ownership
Determine whether you meet the ownership requirement.
If you owned the home for at least 24 months (2
years) during the last 5 years leading up to the date of
sale (date of the closing),
you meet the ownership requirement.
Moderator cut: personal attacks again I quoted the relevant code as to when a "sale" is considered to have happened. You are incorrect as it is NOT always when the deal closes.

Last edited by Marka; Today at 12:31 AM..
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Old 12-03-2017, 08:54 AM
 
Location: Central Mexico and Central Florida
4,258 posts, read 1,749,172 times
Reputation: 5872
Quote:
Originally Posted by aridon View Post
I quoted the relevant code as to when a "sale" is considered to have happened. You are incorrect as it is NOT always when the deal closes.

What I quoted and highlighted in RED is from the IRS website. It is the law. It is not gray area.

Last edited by Marka; Today at 12:31 AM..
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Old 12-03-2017, 12:13 PM
 
324 posts, read 262,466 times
Reputation: 675
Well , my house was listed on 11/30 and went under contract December 2nd with a closing date of 12/29. I think I've skirted this issue. Though as mentioned before, there are costs incurred that can help lower the gain (updates, closing costs). I do feel fortunate and grateful things worked out well.

Best of luck to everyone.
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Old 12-03-2017, 08:39 PM
 
Location: Raleigh NC
5,639 posts, read 4,709,684 times
Reputation: 4841
Quote:
Originally Posted by dothetwist View Post
Unfortunately the proposed tax plan applies to ALL SALES taking place after 12/31/2017. That's my objection to this, that there is no 'grandfather' clause.

We bought our home in 2014 to be near an elderly parent who needed our assistance. He died in late 2015; it took over a year to settle his estate. We have no reason to keep this home now that he is gone and his estate is settled, but our options are to either keep the home until 2019 or sell and pay tax on a substantial capital gain.
As I've said before - I agree that they should be grandfathering anyone who owned the home 2+ years as of the bill's signing into law.

At the same time, your situation is so completely unique, that we cannot make laws that apply to everyone trying to give you an exemption.

You bought the house to be close to an ill family member. It was very compassionate of you to spend that time with him. Surely, investment value wasn't the primary reason you moved there and bought a house.

Perhaps part of your reasoning was that you knew it would be for only a couple of years AND it was an area that was appreciating - regardless of how rapidly it was - and you would be able to sell at the right time and not lose money.

Whether your realized gain is eventually 10K or 200K, it's a gain. You're walking away from the situation in a relatively short period of time and coming out ahead. You're most likely just coming out 15% total LESS ahead than if the old exemption applied.
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Old 12-03-2017, 08:48 PM
 
Location: Raleigh NC
5,639 posts, read 4,709,684 times
Reputation: 4841
as to the "when is a sale a sale" dustup, I can only tell you that in PRACTICE, the CPA's and attorneys would tell us not close until the 2 years was up.
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